Debt freedom is not easy to achieve. You need to make a lot of sacrifices and changes in the way you live your life. In most cases, people have to alter their whole lifestyle just to be able to afford paying off their may credit obligations.
If this is something that you can relate to, you may want to opt for debt relief programs that can assist you in paying your multiple debts. One of the effective methods is debt management.
Debt management is actually self explanatory. You hire someone to manage your debts for you. It may seem like a waste of money to pay for the service fee of the debt counselor but if you think about it, the investment is logical. When someone is in debt, that is evidence that they are not the best handlers of their finances. Of course, you will not rely on the debt counselor to get you out of debt completely and permanently. However, having an expert work with you through tough financial situations will give you a higher chance to succeed than if you worked on it alone.
You don’t have to enroll all your debts but if you want debt freedom, completely signing up your debts will help you pay them off together. When we say all of your debts, these are the debts that qualify for debt management like credit card debts. Secured loans, tax debt, child support and similar debts are not qualified to be enrolled in this debt relief option.
Upon enrolment, you and the debt counselor will look at your finances. You will come up with a debt management plan (DMP) that will show how much you can afford to pay your debts on a monthly basis. Your income and expenses will be taken into consideration so you can still live comfortably despite your credit dues.
The counselor will also help you by allowing you to make single payments every month. You will only send the total monthly due to your counselor and he or she will send the respective amounts to your different creditors.
One of the goals will be to get your monthly dues lower so it meets the amount stated in your DMP – which is technically what you can afford to pay. This will be done by freezing your accounts (e.g. credit cards) and spreading your current balance over a longer payment period. Naturally, you will not be allowed to use your credit cards while you are in a debt management program.
The counselor will also try to negotiate with the creditors to lower your interest rate. This is not a guarantee of course, but it is one benefit that you know is possible.
All of these will help make your debt payments less stressful. However, you need to understand that it can only help you get out of debt to a certain extent. Completing the program and staying out of debt will be entirely your own doing. If you are not committed to this, you may end up having a hard time to reach your financial goals – which at this point, is debt freedom.